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Dr.Grass on 07 March 2014
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haxxiy said:
NeoRatt said:
 

They probably had an average selling price of $40...  That's only $240,000,000...

The cost to build the game was probably around $100,000,000...  Then, borrowing costs, administrative costs, sales, marketing, support, running servers, patches, platform ports, etc...

$240,000,000 doesn't go that far...

Investors looking for ROI's as multipliers... 2x, 3x, 10x, 20x....

Best case scenario they are probably only making .25x...  Why would I put my investment money there?  When I can go and invest in other industries and get 2x, 5x, and 10x the return and not have to front so much.  Gamers don't realize this is about money...  If a solid game like this can only make investors .25x more than their investment they have no incentive to stick in this industry. 

There is no incentive in this industry for a AAA game to be innovative.  Innovation costs more money and there is very little guaranttee that investors will see the money back.  I have a lot of investments.  I don't touch the games industry (even though I love playing games) because as an investor there is no money in it for me.


What the hell?

25% yearly is considered a damn good return on investment and equity both. I'm not sure you know what you are talking about. Unless I'm thinking a different thing and a different timespan, which I consider unlikely, since you mentioned RoI yourself.

In a way, anything breaking even,  above inflation and national interest, can be considered a good investment.

If the market worked solely on multiples every company would have to be Apple at the bare minimum to sustain these standards. Not to mention GDP would be doubling in the span of a few dozen months... China would look like a small fry next to that.

P.S. while I acknowledge there are some investments who return on the multiples, they are extremely rare. If one could reasonably predict which exactly are those, there would be dozens of Rockfellers by now.

25% yearly is considered TOO GOOD TO BE TRUE!